Clare Daly (Dublin North, United Left)
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20. To ask the Minister for Finance the status of the advice he received from his Department opposing the introduction of a tax on sugar; and if he will make a statement on the matter. [1273/16]

Michael Noonan (Limerick City, Fine Gael)
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The proposal of a tax on sugar sweetened drinks (SSD) has been examined by my Department in the context of the 2015 and 2016 Budget process.  It was initially considered through the Tax Strategy Group (TSG) General Excise Paper in September 2014 and again September 2015.  The 2014 Tax Strategy Group paper (General Excise Duties 14.02) is available on my Department's website and the 2015 TSG paper will be published very shortly.

As will be obvious from reading these papers, my Department did not oppose the introduction of a tax on sugar sweetened drinks but simply and objectively outlined the benefits and challenges of such a tax.  The benefits included, for example, the potential revenue that would be raised from such a measure and potential impact on our nation's obesity statistics as outlined in the Department of Health commissioned Health Impact Assessment 2012.  My Department also outlined challenges that must be considered before the introduction of such a tax.  These included the potential impact on retailers and domestic soft drinks producers, the difficulties in applying an excise on a product which is not defined as a product under the EU general excise directive, the challenge in differentiating between sugar sweetened and artificially sweetened products and the challenge of collecting an excise on a product which has free movement between Member States and is not subject to the controls of a bonded warehouse like other excisable products such as alcohol, tobacco and mineral oils.

My Department, however, did oppose one aspect of proposals for a sugar sweetened drinks tax.  And that was to apply it as an ad valorem rate, i.e. a rate of 20%.  An ad valorem tax would mean that essentially that the charge would be lower for value multi-packs and 'own brand' SSD products containing the same volume of sugar as more expensive brands of SSD products.  My Department, rightly in my view, suggested that if such a tax were introduced it should be a volumetric tax, i.e. the tax would be based on the volume of the product.  France, Hungary and Finland have used a volumetric tax on SSDs.

As Minister for Finance, I carefully consider the positives and negatives all potential taxes in the context of the annual Budget and Finance Bill process.  While a sugar sweetened drinks tax was not introduced in the last Budget it remains under consideration.